Financial experts and lending industry figures have identified lack of liquidity as the single most persistent obstacle to SME growth in Nigeria, warning that without better funding access, small businesses will continue to operate well below their economic potential.
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The scale of the problem
Nigeria’s SME financing gap is currently estimated at between N75 trillion and N90 trillion, a figure that underscores how far existing disbursements remain from meeting total demand. Ayooluwa Oladimeji, a prominent voice in Nigeria’s SME financing space, noted that the gap persists despite incremental progress from development finance institutions and government-linked support funds, with current disbursements representing only a fraction of what the sector requires.
Oladimeji identified technology as an increasingly important tool in improving lending efficiency, citing artificial intelligence as one area where lenders are now deploying tools to assess creditworthiness and streamline operations. He described fintech firms as bringing the agility and flexibility that traditional banks often cannot offer, particularly in tailoring products to the cash flow realities of small businesses.
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Why businesses remain locked out
Structural barriers remain at the heart of the problem. Despite accounting for over 90 per cent of businesses in Nigeria and contributing close to half of GDP, SMEs receive only a fraction of formal bank credit. High lending rates, stringent collateral requirements, limited financial documentation among borrowers, and slow credit-scoring processes continue to shut most small businesses out of the formal credit system. Even as headline private-sector credit figures expand, the bulk of that lending flows to large corporates and government-linked entities rather than to the SME sector.
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The road ahead
Oladimeji identified green mobility, agro-processing, and the digital services economy as sectors where investment is most urgently needed and where returns for patient capital remain strong. He maintained that closing Nigeria’s SME financing gap will require sustained innovation and improved funding access, stressing that liquidity remains the essential condition for driving business growth and strengthening the broader economy. Analysts broadly agree that without coordinated reform across policy, banking, and fintech, Nigeria’s SMEs will remain constrained by costly, short-term credit that limits their capacity to scale.
